How to Register a Business in the US from Malta

Step 1: Benefits of starting your US business from Malta

Starting a US business from Malta offers a myriad of advantages, blending the appeal of the American market with the favorable conditions of a Mediterranean paradise. One of the primary benefits is the strategic location of Malta within the European Union. This provides business owners with ease of access to both European and North American markets, fostering opportunities for diverse trade and cross-border partnerships. Additionally, Malta's robust digital infrastructure, high-speed internet, and sophisticated tech services make it an ideal hub for overseeing US business operations remotely.

Another compelling benefit lies in Malta's favorable economic policies and supportive business environment. With a competitive tax regime, significant incentives for startups, and a well-educated, multilingual workforce, Malta offers a fertile ground for innovation and growth. Entrepreneurs can leverage these advantages along with the relatively lower cost of living, creating a conducive setting for business sustainability and expansion. By establishing a US business from Malta, you can enjoy the best of both worlds, maximizing profits while living and working in one of the most picturesque and dynamic countries in Europe.

Step 2: How to start your US business from Malta

Starting a US business from Malta can be an exciting opportunity and involves several key steps. First, you'll need to decide on the type of business entity you want to establish, such as an LLC or corporation. An LLC is often preferred for its flexibility and simplicity. Once you've decided, you'll need to choose a state in the US where you want to register your business. States like Delaware, Wyoming, and Nevada are popular choices due to their business-friendly regulations and favorable tax environments.

Next, you'll need a US-based address and a registered agent in the chosen state to handle official correspondence on behalf of your business. You can usually hire services that offer both a virtual address and registered agent. With these in place, you can then submit the necessary formation documents, such as your Articles of Organization or Incorporation, to the relevant state authority. Additionally, obtaining an Employer Identification Number (EIN) from the IRS is crucial for tax purposes and will also enable you to open a US bank account. By following these steps, you can successfully launch your US business while residing in Malta.

Step 3: Opening a Business Bank Account

A business bank account is a separate account that is used exclusively for business transactions. But why is it important to open a business bank account?

Keeping your personal and business finances separate is crucial. A dedicated business bank account allows you to do just that, making it much easier to track your business’s income and expenses. This clear separation translates to simpler tax reporting come tax season.

But the benefits go beyond bookkeeping. Having a separate account can provide legal protection. It establishes your business as a distinct entity from yourself. In the unfortunate event of a lawsuit or bankruptcy, this separation can help shield your personal assets from business liabilities.

Furthermore, a business bank account can boost your credibility and project professionalism.

It demonstrates to clients and vendors that you take your business seriously and are committed to maintaining accurate financial records. This can be especially important in establishing trust with potential partners.

Finally, a business bank account is essential for accepting payments, even if you utilize a merchant account. Whether you use doola or another service, funneling those customer funds into a dedicated business account is necessary.

doola partners with banks that allow you to open a bank account remotely from anywhere in the world, like Mercury. Shop around and compare different banks’ fees and services.

Look for a bank that offers the features you need, such as online banking, mobile banking, or overdraft protection.

You may also want to consider working with a bank that specializes in small business banking.

Step 4: Understanding Your Compliance Requirements in Malta

Understanding Compliance Requirements for Running a US Business in Malta

When considering expanding or starting a US business in Malta, it is crucial to understand the various compliance requirements. While Malta offers a business-friendly environment, navigating the regulatory landscape effectively ensures your business operates smoothly and legally.

Legal Structure

Before starting operations, decide on the appropriate legal structure for your business. Common options include:

• Private Limited Liability Company (Ltd): Ideal for small and medium-sized enterprises (SMEs).
• Public Limited Company (Plc): Typically used for larger companies intending to offer shares to the public.
• Branch of a Foreign Company: Suitable for businesses that want to operate in Malta without establishing a separate legal entity.

Company Registration

Register your business with the Malta Business Registry (MBR). Essential steps include:

1. Choosing a unique company name.
2. Preparing the Memorandum and Articles of Association.
3. Submitting the registration forms and paying the associated fees.
4. Obtaining a Tax Identification Number (TIN) from the Inland Revenue Department.

Taxation

Malta's tax system is favorable for businesses but comes with specific obligations:

• Corporate Tax: Malta operates a full imputation system, effectively reducing the 35% corporate tax rate to 0-5% for shareholders on distributed profits.
• Value Added Tax (VAT): The standard rate is 18%. Ensure your business is registered for VAT if supplying goods or services in Malta.
• Double Taxation Treaties: Malta has treaties with over 70 countries, including the US, to avoid double taxation.

Employment Laws

Understanding and complying with local labor laws is essential:

• Employment contracts must meet legal standards and be in line with the Employment and Industrial Relations Act.
• Compliance with working time regulations, minimum wage requirements, and health and safety standards is mandatory.
• Non-EU employees require a single work permit, obtained through Jobsplus.

Data Protection

Malta, as an EU member state, complies with the General Data Protection Regulation (GDPR). Businesses must:

• Ensure the lawful processing of personal data.
• Implement robust data security measures.
• Provide transparency and uphold individuals' rights concerning their data.

Business Licenses and Permits

Depending on the nature of your business, additional licenses and permits may be required. Examples include:

• Trading licenses for retail businesses.
• Financial services licenses for companies in the banking and insurance sectors.
• Health permits for food and beverage establishments.

Operating a US business in Malta can be highly rewarding, provided you adhere to the compliance framework. Familiarizing yourself with these key areas helps ensure your business thrives in Malta's dynamic market.

doola offers a Total Compliance package, including bookkeeping services, to help you stay on top of your compliance requirements. This ensures your business operates smoothly and adheres to all legal and regulatory standards.

Step 5: Understanding Your Tax Obligations in Malta

Understanding Tax Obligations for Running a US Business in Malta

Running a US business in Malta involves navigating a range of tax obligations. To ensure compliance and optimize your tax strategy, it is essential to understand the key considerations:

1. Corporate Tax Rate

Malta boasts an attractive corporate tax rate, which is 35%. However, through the full imputation system, shareholders can claim significant tax refunds that can effectively reduce the tax burden to as low as 5%.

2. Tax Treaty Between the US and Malta

The United States and Malta have a tax treaty that aims to prevent double taxation. This treaty is crucial in determining which country has taxing rights over specific types of income, thereby avoiding paying taxes on the same income in both countries.

3. Permanent Establishment

If your business has a permanent establishment in Malta, such as a fixed place of business, it will be subject to Maltese taxation on the profits attributable to that establishment. Understanding what qualifies as a permanent establishment under local law is crucial.

4. Value Added Tax (VAT)

Maltese VAT is currently set at 18%. Businesses in Malta must register for VAT and comply with local regulations regarding the collection and remittance of this tax. Exports outside the EU may qualify for zero-rating, but comprehensive documentation is required.

5. Personal Income Tax

If you or your employees relocate to Malta, personal income tax considerations become relevant. Malta uses a progressive tax rate system that ranges from 0% to 35%, and tax residency status will affect how your global income is taxed.

6. Social Security Contributions

Both employers and employees must contribute to Malta’s social security system. As of the latest guidelines, the contributions are typically a percentage of the employee's salary, with both parties required to contribute equally.

7. Application of Tax Credits

Malta offers various tax credits and incentives for businesses, particularly those engaged in research and development, innovation, and international trade. Familiarizing yourself with these can significantly reduce your effective tax rate.

8. Transfer Pricing Regulations

Transactions between related entities need to be conducted at arm’s length and properly documented. Malta follows OECD guidelines on transfer pricing, making it important to maintain detailed records of intercompany transactions.

9. Compliance and Reporting

Annual tax returns, audited financial statements, and other regulatory filings must be submitted within prescribed deadlines. Penalties for non-compliance can be significant, so timely and accurate reporting is essential.

10. Professional Advice

The complexity of running a US business in Malta makes it highly advisable to seek professional tax advice. Local tax experts can provide valuable insights and help ensure that all your tax obligations are met efficiently.

By understanding these considerations, you can better navigate the tax landscape and optimize your business operations in Malta.

It’s a good idea to consult with a tax professional or an accountant (or to hire these roles in-house) to make sure you’re not missing anything.

doola's Total Compliance package can handle your tax filings for you, ensuring you remain compliant with federal, state, and local tax requirements.

Step 6: How doola Can Assist

doola simplifies the incorporation and setup process for your company, ensuring you’re ready to charge customers, hire your team, and raise funds as quickly as possible.

Fill out your company details in the doola form in less than 10 minutes. Then, we’ll incorporate your company in any of the 50 US states, get your IRS tax ID (EIN) for you, and file your 83(b) tax election if needed. 

doola can also help you open a bank account and start accepting payments even before the IRS assigns your tax ID.

doola founders also gain access to exclusive discounts at leading software partners, one-click onboarding with select partners, and free CPA consultations.

The doola Application

It takes less than 10 minutes to fill out the details of your new company. You’ll choose your company structure (C corporation, limited liability company) and pick a company name.

Our instant company name checker will let you know if it’s available before you submit your application. You’ll add an address and phone number and review and sign your EIN SS4 letter in one click.

Forming the Company

doola will review your application and file your formation documents in the state within one business day. doola charges $297 for our Starter Plan and your first year of registered agent services (a state compliance requirement), and $297 each year thereafter to maintain your registered agent. 

You can also opt for our Total Compliance plan.

Getting Your IRS Tax ID (EIN)

After your formation in the state is complete, doola will file for your company’s IRS tax ID. Founders who provide a US Social Security number, US address, and US phone are eligible for expedited processing. All other users will receive standard processing. 

For standard orders, doola will fax your form SS4 to the IRS and then call the IRS to retrieve the EIN for you to expedite the process if we can, using real-time IRS data to determine when your filing is likely to be available.

Filing Your 83(b) Tax Election

Many startup founders choose to file an 83(b) tax election to potentially save on future personal taxes. doola can file and mail your 83(b) tax election in one click for both US and non-US founders — no trip to the post office required.

We’ll file it using USPS Certified Mail with tracking, and you’ll get a copy of your signed 83(b) election and proof of filing in your Dashboard.

Partner Perks and Discounts

doola partners with a range of third-party tools to offer special pricing or access to founders. We offer discounts on engineering, tax and finance, compliance, and operations tools, including Amazon Web Services.

doola also partners with Mercury to provide faster, automatic onboarding using your doola company information so you can get ready to bank and fundraise even faster.

Founders may also access discounts on other doola products, including up to one year of free credits toward payment processing.

Read our guides for startup founders, or learn more about doola and how we can help you set up your new business quickly and easily.

Turn your entrepreneurship dream into reality today!

We do our best to provide accurate and up to date information, however the information provided here are just guidelines. Please speak with a tax and compliance professional in your country